TMB Bank has received multiple merger and acquisition (M&A) offers from financial institutions such as Thanachart Bank (TBank) and Krungthai Bank (KTB), says Finance Minister Apisak Tantivorawong.
All the offers were part of initial negotiations and none has reached a conclusion yet, he said.
Mr Apisak's comments came after local media reported that ING (which holds a 25% stake in TMB), TBank and TBank major shareholder Bank of Nova Scotia (Scotiabank) would soon talk with Mr Apisak about a plan to merge TMB with TBank.
Under the plan, TMB would recapitalise to facilitate the deal, with Dutch bank ING owning more than 20% but not exceeding 25%, while TBank and the Finance Ministry would hold 20% and less than 20%, respectively.
The Finance Ministry is now the largest shareholder in TMB, with a 25.9% stake.
SET-listed TMB is the country's seventh-largest bank with assets of 873 billion baht, while TBank is the sixth with assets of 1 trillion baht at the end of September, according to Stock Exchange of Thailand data.
TMB has been the topic of M&A speculation for months after the cabinet in April approved a royal decree on tax deductions and exemptions in an effort to encourage mergers among Thai banks and create large "champion" banks that are able to compete with foreign banks.
The Finance Ministry said recently that it was exploring potential partners, both local and foreign, for TMB Bank, but KTB president Payong Srivanich had dismissed speculation over a potential consolidation of his bank with TMB.
Mr Apisak said M&A is one of several options for TMB.
He said the Finance Ministry has offered support for M&A deals by local financial institutions, as demonstrated by the tax incentives for such activity.
Thai financial institutions typically adopt an M&A strategy only when in trouble, he said, unlike Malaysian or Singaporean banks, which merge with the purpose of becoming regional or world-class players.
"Thai financial institutions are unable to compete at the regional level. They can only steal share in the domestic market," Mr Apisak said. "Why don't we share in the market of others overseas?"
KTB Securities said in a note that while the merger between TMB and TBank wouldn't happen soon, it would create synergy in terms of cost savings if it did go through.
The brokerage house said TMB would gain more than TBank, as the deal would allow TMB to enter the auto lending segment.
Capital Nomura Securities is bullish on the deal in the long run, citing TMB's strength in small and medium-sized enterprise (SME) business, while TBank's strong point is retail, particularly in auto loans and bancassurance.
The merger would sharpen competitiveness and cut costs in overlapping areas of business, the firm said.
After consolidation, the lending portfolio would amount to 1.4 trillion baht, of which 738 billion would come from TBank and the rest from TMB.
TMB shares closed Wednesday on the SET at 2.32 baht, up two satang, in trade worth 476.4 million baht.